In June, Vietnam released numerous fiscal measures that could help to support economic growth in H2 2024, including: The implementation of public salary reform, the extension of the 2 ppts value-added tax (VAT) cut, and the extension and reduction of taxes and fees.

(1) The implementation of public salary reform (Resolution 142/2024/QH15 dated June 29)

• Base salary of public sector increases 30%. The Government originally planned to apply the new salary structure for the public sector from July 1, 2024 (see more in our Macro Note published on November 24, 2023). However, the implementation of the new salary structure has been delayed as the Government has not defined all job positions yet. Nevertheless, the monthly statutory pay rate has been lifted by 30% to VND2.34mn (USD92), effective from July 1, 2024.
• Increasing statutory pay rate to support economic growth but increase inflationary pressure. According to the Ministry of Home Affairs, the total funding for the increase in base salary, bonuses, pensions, and benefits for 2024 – 2026 amounted to VND906tn (USD35.6bn or around 9% of 2023’s nominal GDP) (+82.6% vs the plan in the 6th session of the 15th National Assembly). According to the Ministry of Planning and Investment (MPI) , the increase in base salary, bonuses, pensions, and benefits could lift GDP growth by 0.4 ppts in 2024 and by 0.3 ppts in 2025. Also, the MPI estimates that this could also raise the annual headline CPI by 1.2 ppts in 2024 and 1.0 ppt in 2025.

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